Merchants have offered coupons or rebates as incentives for purchasing particular products for some time. Traditionally, coupons are distributed in a paper format. A user redeems the coupon by physically taking it to a merchant and purchasing a product that satisfies the terms of the coupon. Such system is limited in that users are required to clip or print out paper coupons and present such coupons to the merchant to redeem the discount. Other forms of traditional coupons included rebates for purchasing particular products, wherein after purchasing a product that satisfies the terms of the rebate offer, the user fills out and returns required forms to request the rebate. Such system is also limited in that the redemption is not automatically applied and the user is required to submit additional paperwork to receive the redemption at a later time. Also, because such rebates are usually requested and/or sent by mail, they carry a great deal of unreliability and hassle for the user.
More recently, merchants have offered electronic coupons linked to merchant loyalty cards. A user enrolls in a merchant's loyalty program and receives a loyalty card. A user then associates certain discounts to the loyalty card and redeems these discounts by presenting the loyalty card (or some form of identifying information, such as a telephone number) and the method of payment to the merchant when purchasing the discounted products. In other circumstances, discounts are automatically associated with the loyalty card and are redeemed by presenting the loyalty card (or some form of identifying information, such as a telephone number) and the method of payment to the merchant when purchasing the discounted products. However, such systems are limited in that users are required to present a loyalty card (or some form of identifying information, such as a telephone number), in addition to the method of payment, to redeem the discount.
Near Field Communication (NFC) is a proximity communication technology that can enable contactless device payment technologies and that is supported by the Global System for Mobile Communications (GSM) Association. Radio frequency identification (RFID) is another wireless communication technology that can be adapted to enable NFC contactless device payment technology. NFC communication generally is conducted in a range from about 3 to about 4 inches. Such short communication distances limit enable secure communication between close field proximity enabled devices. In operation of an NFC transaction, a user “taps” a contactless device, such as an NFC-enabled mobile phone, to a reader of a point of sale (POS) system. The reader recognizes the NFC-enabled device when the device is moved within range of the reader, establishes a secure communication channel with the device, and initiates a payment transaction between the reader and the device. NFC contactless payment devices can function as a credit card to enable purchases at the point-of-sale. During the conventional transaction, the device and the reader communicate to complete the predefined transaction.